Startup valuations may have taken a hit last year, but that did not stop some investors from minting unicorns at the very earliest of fundraising stages faster than any other year aside from the record-breaking numbers of 2021.
Out of the more than 300 unicorns minted last year, a quarter — 77 — of them were created after an early-stage funding round — defined as seed, Series A or Series B — an analysis of Crunchbase data shows.
However, while last year’s percentage of young unicorns is higher than 2021’s — which was 18% — the number of those created after just early rounds of funding could not come close to matching the venture capital heights of 2021.
A record 107 young unicorns were minted in 2021, but that number fell in 2022 by 28% as global venture funding saw a significant pullback. Last year saw $445 billion in venture funding globally — a 35% decline year over year from the $681 billion invested in 2021 — according to Crunchbase data.
A decline, but …
Although 2022’s young unicorn numbers fell, it is important to note the number is still well above those in the years before venture hit its frenzy in 2021.
In fact, the 77 early-stage unicorns minted in 2022 are more than double the next-best year of 2018, when 38 such unicorns were created.
That shows astonishing resolve (although we could use another word) by investors to put money into young — often untested — companies at ridiculously high valuations, considering the battering tech stocks have taken in the public market.
However, the number of young unicorns created started to slow significantly in the second half of the year. Back in July, we reported 50 early-stage unicorns had already been created — meaning the second half of the year saw only about half that.
Some of those young unicorns — several Web3 and AI related, not surprisingly — minted in the second half of last year include:
- In September, Palo Alto, California-based Aptos Labs hit a $4 billion valuation after Binance Labs — the venture capital arm and accelerator of Binance — made a new, undisclosed strategic investment in the Web3 infrastructure firm, per a Bloomberg report.
- That same month, blockchain developer Mysten Labs closed a $300 million Series B led by FTX Ventures (remember it?) at a more than $2 billion valuation.
- In October, Austin, Texas-based AI startup Jasper closed a $125 million Series A led by Insight Partners at a $1.5 billion valuation.
- San Francisco-based TeraWatt Infrastructure raised a huge Series A of more than $1 billion, also in October. Launched out of stealth in May 2021, TeraWatt Infrastructure has built out a network of charging stations for the operation of light- to heavy-duty EV fleets.
- Also that same month, Uniswap Labs — the company behind the Uniswap Protocol exchange — landed a $165 million Series B led by Polychain Capital that values the company at $1.66 billion, TechCrunch reported.
The slowing pace of newly minted young unicorns in the second half may well indicate what VCs have been talking about for months — the venture slowdown that significantly affected large growth rounds early in 2022 has slowly crept into early rounds.
According to Crunchbase numbers, early-stage funding — consisting of Series A and B — totaled only $31 billion in the fourth quarter last year, down by 54% year over year. The third quarter was down 39% year over year. Before that, the first quarter was actually up and the second quarter down by less than 10% compared to the previous year.
Obviously, if that trend continues, this year could see considerably fewer unicorns minted after the early rounds. So far in 2023, only four such unicorns — including Astronergy and Our Next Energy — have joined the unicorn herd after early fundings.
Venture capitalists started to cast a wary eye at high valuations in later rounds early last year, so it would only be logical they are now doing the same at early rounds.
Even if it means missing out on the next can’t miss new thing — like Web3.
- The Crunchbase Unicorn Board
- The Crunchbase Megadeals Leaderboard Of $100M+ Funding Rounds
- We’ve Seen This Before: Investors Take To The Next Shiny Toy — AI
- 7 Unicorns Arrived And 2 Exited In January 2023
Illustration: Dom Guzman
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